Virginia already has a similar self-distribution company for wine since 2008, which serves as the model for how it would work: Supporters of the BILD Act say it still upholds the three-tier system, which generally requires a middleman (tier two) between producers (breweries, tier one) and retailers (bars and stores, tier three). Even for breweries with existing distribution contracts, the opportunity to sell 500 barrels directly to retailers represents an enhanced business model: Those breweries would be able to self-distribute outside of geographies where they have existing wholesale contracts, or within those areas once they’ve offered their distributor first right of refusal. The BILD Act could seem like a concession from Virginia’s wholesalers, but it’s more so an acknowledgment that the smallest breweries in the state aren’t top priorities for most distributors to begin with-and that likely affects how those breweries are represented on store shelves and draft lists.įor the roughly 60% of Virginia breweries that sell their beer only through their taprooms, the legislation represents a chance to also sell to bars, restaurants, bottle shops, and grocery stores that they otherwise would not have had access to without a long-term distribution agreement. Virginia breweries have a new lifeline to grow and support their bottom line while distributors-historically resistant to giving up control of their codified role in the country’s three-tier system-don’t have to worry about losing work thanks to a cap on how much those companies can sell themselves. It all comes at a time when costs of ingredients and materials have risen for breweries over the past two years, and distributor consolidation across the country leaves fewer wholesalers to service a still-growing number of breweries. In discussing the deal, the state’s beer wholesalers association admits that the existing distribution model isn’t well equipped to handle small-volume beermakers while those breweries are happy to maintain additional control over transportation and portfolio management that self-distribution provides. House Bill 2258 (also known as the Beer Industry Limited Distribution Act, or the BILD Act) is good news for Virginia’s smallest breweries, especially because it’s an acknowledgment of the difficult sales reality they face moving forward without it. (2022 brewery numbers are not yet available.) This new law has the potential to open up more stores for more businesses than ever before. Last year’s craft beer sales in those chain stores was roughly the same as 2019, despite adding 64 breweries between 20. In chain grocery, big box, and convenience stores, craft beer specifically performed only slightly better in Virginia last year (-8% volume) than nationally (-8.7%). The amount of spirits consumed has increased +30%. The change provides a unique support system through a model of beer sales that allows breweries to maintain higher margins at a time when they need it the most.Īccording to data collected by the National Institutes of Health, Virginia residents have declined their per-capita intake of beer by -11% in the past decade. The new law would allow all in-state breweries to self-distribute up to 500 barrels of beer per year. The “limited self-distribution” model aims to lower some of the sales hurdles facing the smallest of the state’s breweries at a time when craft beer sales slow nationally and wholesalers are wary of taking on new brands. to enact a self-funding system by which breweries can directly distribute their beer to retailers. In a rare example of legislative alignment between breweries and beer wholesalers, Virginia is poised to become the first state in the U.S. Big plays, smart moves, and otherwise curious indicators of beer's possible future.
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